SPCG selling 10% stake to Gulf Energy Development

SPCG, a publicly listed solar-power developer, yesterday signed an agreement to sell 10 per cent of its shares for Bt1.84 billion to Gulf Energy Development, a leading independent power producer.

Wandee Khunchornyakong, chairperson and chief executive of SPCG, yesterday told reporters that the company’s shareholders had approved the allotment of 83,998,952 capital-increase shares, or about 10 per cent of its stock, through private placement to Gulf Energy Development.

The share-sale price was finalised at Bt21.93 apiece, meeting the stock market’s regulations that it is not lower than 90 per cent of the weight-averaged price of SPCG shares traded on the local bourse during the prior 25 consecutive trading days.

SPCG will use the proceeds to fund working capital and for expanding its businesses, both in Thailand and elsewhere in Asean, she said.

Sarath Ratanavadi, president of Gulf JP – Gulf Energy Development’s parent – said the company had confidence in SPCG and its chief executive, as the solar-power firm had succeeded in developing all of its projects as planned.

“And importantly, the fundamentals of its solar-power projects are at a very good level. Besides, it has a strategic partnership with Kyocera, which is a top global solar-cell producer. We think it can support [our business], since we have not been focusing much on renewable energy,” he said.

Sarath said Gulf JP was taking a long-term view and had not considered SPCG’s current price/earnings ratio when it decided to purchase the shares.

SPCG shares have been trading at more than 30 times its earnings. Its stock closed at Bt26.50 yesterday on the Stock Exchange of Thailand, up 3.92 per cent from Thursday.

Sarath said SPCG had already been doing well with its domestic projects, and thus Gulf – which has strategic partners in Japan and the United States – could assist in its overseas expansion plans.

The company can also help SPCG to lower its financial costs, due to its good relationship with overseas creditors, he added.

Gulf, which is 49 per cent-owned by Japan’s J-Power, is one of Thailand’s largest independent power-producer groups.

The company is negotiating to conclude a Bt70-billion loan by year-end for refinancing old debts and financing a small power-producer project, said Sarath.

SPCG, which is completing the construction of all its remaining solar-power projects by the end of this month, is looking to tap more growth overseas. Its chief executive told reporters in April that Japan was the most likely destination for the company’s overseas investment.

At yesterday’s press conference, Wandee told reporters the company was also eyeing a good opportunity to expand its solar rooftop business in the local market, due to the National Council for Peace and Order’s recent announcement that it was waiving the factory-licence permission requirement for projects up to 1,000 kilowatts of capacity.

However, the first benefit from Gulf’s share participation will be the effect it has on financial cost, she said, adding that SPCG will undertake a study on how it can restructure its finances.

“If our financial cost is lowered, it will help improve the feasibility of our projects – and that will benefits shareholders overall,” said Wandee.

The CEO said SPCG was maintaining its 2014 sales target at more than Bt3.5 billion, as all 36 of its solar-farm projects with a combined capacity of 260 megawatts would be in operation during the course of the year.

It also aims to reap Bt300 million-Bt500 million in sales from new solar rooftop business this year.

Wandee Khunchornyakong, chairperson and chief executive of SPCG, yesterday told reporters that the company’s shareholders had approved the allotment of 83,998,952 capital-increase shares, or about 10 per cent of its stock, through private placement to Gulf Energy Development.

The share-sale price was finalised at Bt21.93 apiece, meeting the stock market’s regulations that it is not lower than 90 per cent of the weight-averaged price of SPCG shares traded on the local bourse during the prior 25 consecutive trading days.

SPCG will use the proceeds to fund working capital and for expanding its businesses, both in Thailand and elsewhere in Asean, she said.

Sarath Ratanavadi, president of Gulf JP – Gulf Energy Development’s parent – said the company had confidence in SPCG and its chief executive, as the solar-power firm had succeeded in developing all of its projects as planned.

“And importantly, the fundamentals of its solar-power projects are at a very good level. Besides, it has a strategic partnership with Kyocera, which is a top global solar-cell producer. We think it can support [our business], since we have not been focusing much on renewable energy,” he said.

Sarath said Gulf JP was taking a long-term view and had not considered SPCG’s current price/earnings ratio when it decided to purchase the shares.

SPCG shares have been trading at more than 30 times its earnings. Its stock closed at Bt26.50 yesterday on the Stock Exchange of Thailand, up 3.92 per cent from Thursday.

Sarath said SPCG had already been doing well with its domestic projects, and thus Gulf – which has strategic partners in Japan and the United States – could assist in its overseas expansion plans.

The company can also help SPCG to lower its financial costs, due to its good relationship with overseas creditors, he added.

Gulf, which is 49 per cent-owned by Japan’s J-Power, is one of Thailand’s largest independent power-producer groups.

The company is negotiating to conclude a Bt70-billion loan by year-end for refinancing old debts and financing a small power-producer project, said Sarath.

SPCG, which is completing the construction of all its remaining solar-power projects by the end of this month, is looking to tap more growth overseas. Its chief executive told reporters in April that Japan was the most likely destination for the company’s overseas investment.

At yesterday’s press conference, Wandee told reporters the company was also eyeing a good opportunity to expand its solar rooftop business in the local market, due to the National Council for Peace and Order’s recent announcement that it was waiving the factory-licence permission requirement for projects up to 1,000 kilowatts of capacity.

However, the first benefit from Gulf’s share participation will be the effect it has on financial cost, she said, adding that SPCG will undertake a study on how it can restructure its finances.

“If our financial cost is lowered, it will help improve the feasibility of our projects – and that will benefits shareholders overall,” said Wandee.

The CEO said SPCG was maintaining its 2014 sales target at more than Bt3.5 billion, as all 36 of its solar-farm projects with a combined capacity of 260 megawatts would be in operation during the course of the year.

It also aims to reap Bt300 million-Bt500 million in sales from new solar rooftop business this year.